The General Assembly arrived in Richmond on Jan. 11 with a $1.26 billion hole in state revenues and left 46 days later with a $107 billion, two-year budget that restores pay raises to public employees, invests in mental health services and protects education funding, while carving out a new revenue reserve.

“What we have done is nothing short of remarkable,” House Appropriations Chairman S. Chris Jones, R-Suffolk, told the House, which adopted the revised two-year spending plan on a 96-1 vote on Saturday morning.

On the other side of the Capitol, the Senate voted 40-0 to adopt the budget compromise that negotiators for both chambers reached Wednesday. Senate Finance Co-Chairman Emmett W. Hanger Jr., R-Augusta, said the committee had “been working hard to address priority needs with limited resources.”

No priority was higher than restoring a 3 percent pay raise to state employees — promised and then lost last year in the face of an unexpected revenue shortfall.

And no agency was a higher priority for lawmakers than Virginia State Police, which received a $7,000 boost in starting salary as well as pay for veteran officers to reverse an accelerating exodus of experienced troopers to other law enforcement agencies.

The budget even restored $1.2 million that had been promised last year for a new tactical unit in Southwest Virginia.

“We couldn’t be happier,” said former state police Superintendent M. Wayne Huggins, now executive director of the Virginia State Police Association.

Huggins said the budget investments, which House and Senate budget leaders announced earlier in the session, seem to be working. A half-dozen or more former troopers have inquired about coming back to the department, and other veteran officers have decided not to retire, he said.

“It seems to be having a beneficial effect on the front and the back ends,” he said.

The money committees redirected funds that Gov. Terry McAuliffe had set aside for a proposed one-time, 1.5 percent bonus that met with little support from legislators and state employees, and they found other savings to finance a compensation package that also includes:

a 2 percent raise for sheriff’s deputies and other state-supported local employees, as well as money to help local sheriff’s departments keep veteran employees’ pay from lagging that of new hires;

a 2 percent raise for teachers that represents the state’s share of salary increases that most school divisions gave last year after the state money disappeared, or, alternatively, for pay increases they can give in the next year;

a 2 percent raise for faculty at all public colleges and universities and money for an additional 1 percent at eight institutions that didn’t give raises or bonuses last year (the remainder can give the additional raise with their own money);

a 2 percent additional raise for state employees in high-turnover jobs, such as nurses and direct-care staff at state behavioral health institutions, such as the Commonwealth Center for Children and Adolescents in Staunton; and

$3.3 million to fund a career development program for employees in constitutional offices, such as commonwealth’s attorneys, treasurers, commissioners of revenue and sheriff’s departments and $2.6 million for district court clerks.

The assembly, spurred by the House, also raised the starting salaries of the Division of Capitol Police by $6,750 a year, while giving veterans a $4,355 raise. It also gave the agency money to fill vacancies and hire an additional half-dozen officers in preparation for increased security requirements when the assembly moves next year to the Pocahontas Building.

Richmond impact

The budget also gives the Capitol Police and Department of General Services control over a portion of Bank Street — from North Ninth to North 12th streets — while the legislature is meeting in the Pocahontas Building during the next four sessions as its 41-year-old home is replaced.

The state is working with city officials to limit disruption of the busy thoroughfare on the south side of the Capitol.

In another provision that affects Richmond, the budget includes $7.5 million for a fund that cities and other localities with high poverty rates can use for “community employment and training programs” to help move people off public support and into jobs. Richmond pioneered the idea as “community wealth building” under then-Mayor Dwight C. Jones.

Mental health

The assembly also agreed in large part with a major new investment in mental health services proposed by McAuliffe, although it cut some of the governor’s proposals and replaced them with others, such as $5 million to provide supportive housing for people with serious mental illness.

The $32.2 million package approved Saturday also includes $4 million to expand access to the program that McAuliffe proposed three years ago to serve people with mental illness who earned too much to qualify for Medicaid and $7.5 million to pay for a new mandate on community services boards to serve people the same day they apply for help.

Legislation to require same-day access was among two dozen or so bills that legislators settled in less than two hours on the final day of the session, along with a compromise that gives the Board of Corrections the authority and responsibility for directing investigations of suspicious deaths in local and regional jails. The budget includes $100,000 to pay for the new duties.

McAuliffe was not on hand for the customary visit of legislative leaders at the end of the assembly session because he is presiding as chairman of the National Governors Association during its winter meeting in Washington.

But the governor released a statement that chided the legislature for not including $4.2 million in the budget to allow screening and assessment of inmates for mental illness at regional and local jails.

Legislators say they want to wait for the Joint Subcommittee on Mental Health Services, led by Sen. R. Creigh Deeds, D-Bath. It will extend its work another two years to consider a major restructuring of the state’s fragmented behavioral health system.

Economic development

McAuliffe also repeated his concern over cuts in spending that he promised to nurture emerging industries — such as cybersecurity, solar energy and biotechnology — and the assembly’s decision to restore $7.5 million of the $15 million he had pared from the budget for GO Virginia, a regional economic development initiative favored by legislative leaders and corporate executives.

The assembly also approved a compromise on Saturday for the restructuring of the Virginia Economic Development Partnership to address concerns that the Joint Legislative Audit and Review Commission raised in a highly critical report last fall.

The legislation reconstitutes the partnership’s board of directors while requiring it to supervise the independent authority’s staff, establish a new division to oversee state financial incentives, and hire an internal auditor.

“It’s been a collaborative effort between the two chambers and the governor’s office,” Jones said.

Education

Education was the other top priority of the budget committees, which added $34 million to money the state sends to localities on a per-pupil basis through the lottery to spend as school divisions choose.

The budget also restores more than $20 million of a $76 million the governor cut in higher education funding to address the projected shortfall in the next fiscal year.

Democrats supported the budget with one exception: Del. Kaye Kory, D-Fairfax, who said after the session adjourned that she couldn’t vote for provisions that stripped money to provide contraceptives for poor women or increased oversight of food stamp recipients.

“There are things (in the budget) that are punishing,” she said.

Speaker Howell

However, Kory expressed regret for voting against the final budget adopted on the watch of House Speaker William J. Howell, R-Stafford, who will retire in January after 30 years in the House and 15 as speaker.

Jones, whom Howell appointed as Appropriations chairman at the beginning of 2014, became emotional in his farewell to the speaker. “I want to thank you for the trust you placed in me,” the chairman said.

For Howell, the final day of his final regular session produced a final disappointment. His long-sought effort to establish an optional retirement savings plan to replace defined pension benefits for state and local employees died. The Senate declined to appoint members to a conference committee to reach a compromise on the chambers’ competing bills.

“I really believe the fiscal stability of the Virginia Retirement System is challenged,” he said in an interview.

Howell called the Senate’s proposal “ridiculous” because of clauses that would have required the assembly to approve the legislation again next year and not allow it to take effect until all state pension plans are 95 percent funded, compared with the current low 70s, in general. “I’m disappointed that the Senate chose not to engage. … They’re just kicking it down the road,” he said.

Hanger said the Senate never liked the speaker’s plan because it would require major investment by state and local governments to pay down unfunded liabilities that he said would be stranded if the state adopted a different kind of retirement plan.

“We didn’t want it to pass,” he said. “So when the time came to appoint conferees, we just didn’t. It seemed like the easiest way to deal with it.”